RBI must have rainy day fund, but generations have been waiting for rain: Arun Jaitley

In exclusive interview with India Today TV, Finance Minister Arun Jaitley defended the government’s demand that the RBI hand over some of its surplus money

In exclusive interview, Arun Jaitley spoke on a number subjects, including the government-RBI face-off, CBI vs CBI war, the idea of a grand alliance against the BJP, and Ram temple (PTI photo)

Money held by the RBI in its reserves could be used to eradicate poverty, Finance Minister Arun Jaitley said, as he opened up in a wide-ranging conversation on a number of subjects, including the CBI vs CBI war, a potential grand alliance against the BJP, and the Ram temple issue.

The Centre’s demand that the RBI hand over some of the money it holds in its reserves has been among the flashpoints between the government and the Urjit Patel-led Reserve Bank of India.

The issue was put on the backburner after the RBI and the government reached an uneasy truceand agreed to refer the question of whether the central bank can transfer some of its surplus currency to the government to an expert committee.

Finance Minister Arun Jaitley, in an interview to India Today TV, said that there was a need for the RBI to “fix” how much money it holds in its reserves.

“There has to be a capital framework,” Jaitley said, calling for a set policy that determines how much the money RBI should hold in its reserves and what it should with surplus currency.

Jaitley said that former Raghuram Rajan, during his term as the chief economic advisor, had advocated for a capital framework policy but “went back” on the issue when became the Reserve Bank of India governor.

Jaitley also challenged the central bank’s argument that the RBI was maintaining high reservesfor exigencies. “You are keeping reserves for a rainy day while generations of people are waiting for rain,” Jaitley said.

“Surplus RBI reserves can be used for poverty alleviation,” Jaitley said.

‘NOT CROSSING RED LINE’

Jaitley rejected accusations that the government was infringing on the RBI’s autonomy or was crossing a ‘Laxman rekha’.

“The government is crossing no red line but the government cannot be oblivious,” Jaitley said, adding that there is a problem of cash flow and credit in some sectors.

Jaitley also indirectly confirmed that the government has invoked the never-used-before Section 7 of the RBI Act in order to get a leg up in its face-off with the central bank.

The government is “using every section at its command” in order to get the central bank to take a decisive step on increasing cash flow in the economy and easing restrictions on lending, Jaitley said.

‘SOMETHING WRONG WITH CBI’

Arun Jaitley also spoke about the mess within the CBI, the other three-letter agency that has been making headlines for all the wrong reasons.

The top two officers of the Central Bureau of Investigation — director Alok Verma and his deputy Rakesh Asthana — are involved in an ego battle that became public after both accused each other of being corrupt.

The feud earned the CBI and the government bad press, forcing the Centre to send both Verma and Asthana on forced leave.

This prompted accusations that the government was interfering in an agency that is supposed to be autonomous. Jaitley defended the government saying that a “cleansing exercise” was required considering what was happening within the CBI.

The “allegation and counter allegations” made by Alok Verma and his No. 2 Rakesh Asthana “prove that something is seriously wrong” with the CBI, Jaitley said.

“A cleansing exercise was required and the Supreme Court has been seized of the matter,” Jaitley said, referring to the Supreme Court hearing Alok Verma’s plea against the government order sending him on leave.

RAM MANDIR

“A large population of India wants a [Ram] temple at Ayodhya,” Jaitley said when asked about the hot-button issue of constructing a temple at a controversial site where the Babri Masjid once stood. (It is believed that a Ram temple originally stood on the location that was demolished to make space for the Babri Masjid.

Jaitley however remained mum on whether the government could bring in an ordinance or a law to construct a Ram temple in Ayodhya.

The Supreme Court is set to hear a property dispute case that could decide who owns the controversial land in the Ayodhya.

The court however said it will decide on when to hear the case only in January, prompting calls from some quarters that the government make a law in order to build a Ram temple before the 2019 Lok Sabha election.

Jaitley however neither confirmed nor denied that the government was considering bringing in an ordinance or a law on the issue. “If a decision is taken, it will be announced,” Jaitley said.

Jaitley also accused opposition parties of trying to “coerce” the Supreme Court on the Ram temple issue. Jaitley alleged that the impeachment motion brought against Chief Justice of India Dipak Misra was actually an exercise in “coercion”.

The impeachment motion ultimately failed and Misra retired on October 2.

GRAND ALLIANCE

Arun Jaitley dismissed the idea of a ‘mahagathbandhan’ or a grand alliance fighting against the Bharatiya Janata Party in next year’s general election.

Jaitley said there was no central figure who could stitch together a grand alliance. But what about Rahul Gandhi?

“The tail of an alliance cannot be the nucleus,” Jaitley replied, adding that opposition parties all have “ambitious” leaders who “lack support base”.

Jaitley also suggested that any potential grand alliance would be foiled by internal politics. “In a mahagathabandhan, who will use whom and who will trip whom is not clear,” Jaitley said.